Tax whistleblower triggers alarm at Lendlease, Greenwoods and Freehills over legal claims

Former Greenwoods and Freehills tax adviser Tony Watson has raised the hackles of Lendlease and PwC over court claims lodged in his marathon whistleblower fight.

Lendlease chief Tony Lombardo was chief financial officer during some of the period Mr Watson alleges he raised the issue. Picture: Jane Dempster

Lendlease tax whistleblower Anthony Watson, who warned the property giant over its contentious tax arrangements, has triggered a meltdown after filing evidence in his court battle alleging unfair dismissal.

In letters seen by The Weekend Australian, lawyers for Lendlease and Greenwoods & Herbert Smith Freehills, which was bought by consulting giant PwC Australia, have both raised concerns over evidence filed in Mr Watson’s Federal Court battle.

In the correspondence, both sides raise concern over the affidavits in the marathon Federal Court battle, first filed in 2022, by the former heavyweight tax partner at Greenwoods and Freehills.

They say “it is of serious concern” that Mr Watson has access to the highly sensitive documents, which threaten to unravel claims made by Lendlease over its tax treatment as an Australian Taxation Office audit hangs over the property giant.

Lendlease received a $112m amended assessment last year, with concerns the under-pressure property giant may face a total $300m tax bill after relying on highly aggressive tax advice from PwC.

Lendlease tax whistleblower Anthony Watson.

Lendlease claimed tax deductions on its retirement villages business, affecting the capital gains tax it should have paid on the business when it sold stakes to Aware Super and Dutch pension giant APG.

In his claims, Mr Watson alleges he was told to “not rock the boat” when raising the tax treatment, alleging Lendlease’s head of tax, Paul Hooper, did not want any exposure of the issue.

Lendlease has said it will fight the ATO’s assessment, but adds it may face up to $50m in extra tax bills if the tax office applies a similar treatment to its partial sales.

The global construction giant is midway through a major reorganisation, in which Lendlease is selling off chunks of its business in a bid to rationalise its model and rescue the ailing company.

Lendlease warned in early January it would face a $100m “net cash outflow” from the divestment of its UK construction business, adding to the looming tax woes.

Mr Watson alleges he was wrongfully sacked from Greenwoods and Freehills, after first being sidelined from the firm, in the wake of raising serious concerns over Lendlease’s tax treatment of the sale of multiple assets.

Lendlease’s current CEO, Tony Lombardo, was chief financial officer during some of the period Mr Watson alleges he raised the issue, while current Star Entertainment chief executive Steve ­McCann was the CEO.

Mr Watson, who was so central to Lendlease’s operations that he was appointed protector of the ­estate of its founder Dick Dusseldorp, claims he told the firm’s man­agement its accounting ­arrangements were improper.

Mr Watson alleges a number of incidents starting in 2012 where he warned Lendlease it was exposed to a massive tax upset after its treatment of asset sales, including its retirement living business, but was ignored.

Greenwoods and Freehills, which was previously an independent tax firm, was snapped up by PwC in February 2022 after losing out to the highly aggressive consulting firm for tax advisory.

PwC has since has adopted a “growth at all costs” mindset, offering aggressive tax structures to clients in a bid to win business.

The Weekend Australian is aware of a Melbourne-based senior tax adviser, who is still at PwC, who provided the advice.

PwC’s former head of international tax Peter Collins. Picture: Luis Enrique Ascui

The firm has also come under fire after being revealed to have misused confidential government tax information alongside a highly aggressive tax structuring approach to supercharge its tax practice.

The firm’s former head of international tax, Peter Collins, was banned after being found to have shared confidential government tax briefings, allowing the firm to front-run new tax laws.

Former PwC tax partner Paul McNab claims the firm’s aggressive tax strategy was helped by global tax partners including PwC International Washington National Tax Services partner Matthew Chen.

Mr McNab also says a number of other partners at PwC, including Lyndon James, as well as Nick Middleton, Robert Hines, Greg Weickhardt, Michael Bona, ­Michael Taylor and Stuart Landsberg, all were copied in on emails allegedly detailing confidential information shared by Mr Collins.

The latest salvo of letters comes as Mr Watson’s case inches towards a trial, with a case ­management set down for February 20 before judge Elizabeth Raper.

Mr Watson previously sought to take the case to the High Court, in an attempt to use current whistleblower protection laws that were put in place in 2019, but was blocked.

He is seeking $15.5m from Greenwoods and Freehills and Lendlease, claiming this covers the amount he would have earned if not for being sidelined over trying to stop the construction giant’s questionable tax deals.

This comes after an unsuccessful mediation between the parties in September.

A Lendlease spokeswoman declined to comment “as the matter is before the court”.

A PwC spokeswoman, on behalf of Greenwoods and Freehills, also declined to comment.

Originally published as Tax whistleblower triggers alarm at Lendlease, Greenwoods and Freehills over legal claims